Thursday is the new Tuesday

The SMH reports that the cheapest day for petrol has now shifted to Thursday.  No big deal – supply and demand – as people changed their habits to benefit from cheap Tuesday prices, it was inevitable.   Which makes this reaction somewhat laughable:

Motoring body NRMA wants oil companies and servos explain why the cheapest day to buy fuel has quietly changed from Wednesday to Thursday during the past three weeks.

It’s the first change to the weekly price cycle since 2004, when it moved from Tuesday to Wednesday.

What planet are these people on?

It means motorists are continuing to miss out on cheaper prices, NRMA president Wendy Machin said.

The latest shift comes as the Federal Government urged for petrol prices to be investigated.

“Something untoward is happening with the weekly price cycle,” Ms Machin said.

Changing price cycle to match demand would be considered common sense to most people… but when it comes to petrol, it’s something untoward.

22 thoughts on “Thursday is the new Tuesday

  1. It’s like me finding out the cheapest time to go grocery shopping is 10:30pm on a Wednesday and then getting crabby because I have to pay more at 11am on a Saturday

  2. I’m amazed the oil companies maintain their weekly price movements though. It’s so often used as “evidence” of collusion, you’d think they’d give it up. So what if everyone turns up to buy petrol at the same time? It’s an externality for which they won’t be blamed.

  3. I was hoping that Alan Evans’ surrender of the NRMA presidency would see a return to rationality there, but it looks like his legacy has nicely infused the culture of the place.

    So – we have the situation where the supply/demand balance in the refineries meant that the oil companies were prepared to offer incentive pricing on a low demand day of the week to keep the tankers moving evenly – which became common knowledge.

    With EVERYONE ( and I mean for example highly paid Channel Nine media stars and Conspress execs screaming for their Tuesday lower prices ), not surprisingly the demand profile shifted. And thus the incentive day shifts.

    So, perhaps worthy of a note to the NRMA membership.

    But instead, this gets morphed into a right ( cheap Tuesdays ) for which the social engineers step into bat to protect that most deserving victim class – ‘working families who drive’ – from the evil that is The Market.

    Relentless drum beat of statism and nationalisation continues to build on the basis that the vast bulk of voters and consumers are helpless victims blowing in the wind who desperately need the protection of the Big Bros and Sisters in Canberra.

  4. On Friday I thought I would hold out till today (Tuesday), but no drop came and I had to buy. I think the general change in price has lowered, in SE QLD you could see it go up and down 14c/L now its usually only 3 or 4 cents and noth worth the time avoiding/sync’ing.

    Whats amazing is that Thursday only have 2% of people buying fuel! No wonder Thursday has changed into the cheapest day!

    “Oil companies should be made to explain why the low end of the price cycle had moved to Thursdays without warning, Ms Machin said. ”

    LOL. Why aren’t NRMA made to explain why their rates go up and down like a yo-yo ‘without warning’.

  5. I think people just want some sense of definiteness.

    My supermarket changes its special catalogues every week then occasionally an item will have a price hike, but with such a variety of goods there isn’t going to be much price fluidity in a single supermarket. It’d be too much effort to change the tickets every day multiple times per day. Maybe once they introduce digital tickets and digital pricing..

    With fuel, though. It’s a “single” item, or like 3 items… unleaded, premium and diesel. So it is easy to change the prices of all 3 items frequently. You’ll notice the chocolate bars inside the service station themselves don’t change price as much.

    Given the limited choice it’s more comparable to like a hairdresser and hairdressers DO charge more for weekend and public holiday haircuts because of the higher demand. But I guess at hair dressers the prices are fixed for particular days across a certain period. So consumers still have certainty. Also it’s a service not a good. Supply is restricted on a saturday in a noticable way for a hairdresser. A petrol station, as far as I know has no real shortage so they are only adjusting their prices based on demand.

    I don’t think it’s ethical business behaviour. But plenty of things aren’t. Asking the government to limit the fuel companies is worse.

    I believe there’s a quote similar to that in On Liberty. But I can’t find it, nor remember it off the top of my head.

  6. Found it:

    “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.”

  7. Honestly why does everyone make such a song and dance about petrol? If you drive 15,000km/year and have bought a remotely sensible car, which gets 11 L/100km, say, then even if you pay 10c/L “too much” every time you fill up, it will set you back around $3 a week. Yet every time the price of petrol rises a little, you’d think the fucking sky was falling. People have it too good in this country if they can whinge and moan about that. Not to mention that tax burden probably slugs you more like $400 a week, but somehow people largely remain blissfully unaware of it.

  8. Well, not sure if unethical is the right word. But it’s clearly something the majority of petrol consumers are unhappy about.

    I think that the role of a businessman is to try and please the customer while simultaneously maximising profits. Customer service is an end unto itself, in my opinion, not just a means to try and maximise profits even more.

    I think a good-spirited businessman would have consistent prices or at least clearly advertised and regular price fluxuations so as to please his customers.

    Petrol is a “need” in a modern society, not really a “want”. And limited number of companies hold a “monopoly” (because of the cartel arangements) over the sale of fuel. This leads to price fixing, even if it’s informally, where consumers are required to do more research than normal or face higher prices.

    I think ethical business behaviour is open and transparent and doesn’t try and “trick” the consumer. I think having such price volatility is kind of a “trick”, especially when the cheap days and expensive days don’t stay regular.

    I don’t have any great complaint with the petrol companies- their prices are well advertised. But I can empathise with the consumers that feel screwed over and like the petrol companies are behaving deceptively. As the Adam Smith quote says, though. That’s what businesses do if they collude and there’s nothing you can do about it.

    (was getting the Smith quote confused with one about free speech before)

  9. Lots of “quote-marks” there, Shem…

    I think that the role of a businessman is to try and please the customer while simultaneously maximising profits.

    Then you think incorrectly. The “role” (sic) of a businessman is to maximise profits[1]. Of course, keeping the customer happy is often conducive to those ends, but it’s generally a side-effect, rather than a primary goal.

    [1] Not strictly correct, of course… it’s actually their goal to maximise value – which isn’t necessarily about money, and can vary from business to business.

    I think a good-spirited businessman would have consistent prices or at least clearly advertised and regular price fluxuations so as to please his customers.

    Well – nothing stopping you opening a servo and making people happy. Personally, I don’t see what’s so “good-spirited” about not adjusting your prices to maximise profits…

    Petrol is a “need” in a modern society, not really a “want”. And limited number of companies hold a “monopoly” (because of the cartel arangements) over the sale of fuel.

    Food is a need too… I don’t see the point here. Given that nearly a third of the price of fuel is government taxes (and that the majority of the world’s oil is controlled by governments), I’d say it’s not business doing the gouging. Of course, they’ll often get in bed with government to screw people over – and that is certainly unethical.

    I think ethical business behaviour is open and transparent and doesn’t try and “trick” the consumer. I think having such price volatility is kind of a “trick”, especially when the cheap days and expensive days don’t stay regular.

    That’s silly… you could turn it around and say that ethical customers shouldn’t change their buying patterns – they shouldn’t “trick” business like that. An absurd argument of course, but no more so than yours.

  10. Food is a need, I agree. And food prices don’t fluctuate day by day just because Coles has more customers on a Friday night than a Monday morning.

    No other business seems to engage in this level of volatility and price fixing. I just think it is wrong.

    Sure they are entitled to and maybe it will make them profits. But essentially it is profiting from people’s stupidity. It’s like the telemarketers that call you up saying you have “won the chance to pay $100 for their product”. It’s dishonest. I don’t believe it should be regulated. Just like I don’t think a husband cheating on his wife should be regulated. But there are economic and social practices that I think are wrong. And I think people, including myself, are entitled to complain and be vocal about said practices.

    It’s more unethical to involve government violence. But it is also unethical to price fix, trick consumers or cheat. Business’ primary motive is making a profit sure- but making a profit is a function without ethics. I think people should have an ethical code beyond their “primary function”. Hedonism isn’t everything. If it was the wealthy would without question be the happiest.

  11. Oh and Fleeced I also think that an ethical consumer should use businesses they like instead of just finding the cheapest price. If I enjoy the customer service at my local store then “the right thing to do”, in my opinion, is to buy from my local store rather than online.

    Humans should be compassionate, even in business. Trade has benefits even when people aren’t compassionate. Even if people are selfish and maximising profits humanity will be better off. But altruism well placed can better maximise happiness. Compassion and “fair play”, too.

  12. I think Fleeced and Shem are both being misguided in their approach to capitalism, though both are essentially correct for their respective sides of the ‘argument’. Capitalism is virtuous. By definition, the capitalist improves his own lot by helping others. If he’s acting as a true capitalist he should feel good about making a profit or getting a cheap deal, because he’s acting as a decent productive human being, and that’s all we can ask of anyone. It’s not about me having power of you, or me exploiting you to my own ends.

  13. I think Fleeced and Shem are both being misguided in their approach to capitalism

    Perhaps my post wasn’t clear… my position is essentially the same asyours – my line about customers being unethical was to highlight the absurdity of saying the same about business in this context.

  14. Hedonism isn’t everything. If it was the wealthy would without question be the happiest.

    You are once again confusing “money” and “value”. You value things more than money. That’s cool – but you seem to think people with different values are unethical. That’s crazy-talk.

  15. Food is a need, I agree. And food prices don’t fluctuate day by day just because Coles has more customers on a Friday night than a Monday morning.

    Actually this is completely false both in the cases of supermarkets and restaurants. The prices of many commodities fluctuate day by day according to demand. In the case of restaurants they even charge different prices for the same food depending on the time of day. Unless you’ve never heard the term “lunch special” before?

    There’s nothing unethical about it, it is just a fairly basic application of the laws of supply and demand.

    Unless by unethical you mean “things that Shem doesn’t like”.

  16. Movie Theatres, theme parks, airlines and just about every business on earth does the same thing.

    DVD rentals $2 on a tuesday, $5 on a friday or saturday. Why? because demand is higher. More people want to watch a DVD on the weekend. The market can bear a higher price at that time and still rent the same # or more DVDs.

    Airlines charge $1000 to fly to Sydney on a monday, returning friday, but only $500 to fly on thursday, returning Sunday. Why? Because a business travellers can afford to pay more and are inflexible with dates. Holiday travellers can go on the weekend and are more price sensitive.

    Pretty basic stuff to be honest, shouldn’t have to explain it to adults.

  17. I admit holidays have a lot of price volatility but that is because supply is based on demand. If a flight is not full then it can cause a business to run at a loss. Explain how that is the case for petrol?

    DVD rentals like Restaurants and haircuts as I mentioned earlier have clearly flagged price increases on certain days so you can walk in on Saturday go “it’s more expensive today than it is on Tuesday” and then leave and come back Tuesday. Point me to a petrol station where their entire week’s prices are advertised and I’ll accept the comparison.

    I am not complaining about changing prices- I am saying that the way service stations change their prices seems unethical. There is something of a pattern to it, but unlike EVERY other example you gave (except travel) you do not know the price changes in advance. A hair salon, a restaurant and a movie rental place all have well advertised price fluctuations. Petrol stations do not.

    And unlike travel which has high operating costs based on the number of customers a petrol station isn’t really TOO worried if people buy their petrol on Tuesday or Wednesday.

    So if you are going to try and make comparisons to other business transactions make sure the comparisons actually work.

    I shouldn’t have to explain how to use comparison to an adult.

  18. And Fleeced- the whole point of ethics is to make judgements about certain ways of living.

    If I just say “ethics is all subjective” then I can go around murdering people if I benefit because it’s my preference to do so. Freedom is the value I give primary importance to. But It seems that most libertarians ONLY care about freedom.

    I care about freedom most, then tolerance, then compassion, then merit, then, where possible and practical and not at the expense of other values, some degree of equality.

    Freedom is not some special ethical case. It is a value just like any other value. You might think freedom is a “higher” value or a more successful value, but others may think that freedom is overrated and equality is worth more. Most socialists do.

    I think that we need to look at what brings success to society in determining the values we strive for. In which case freedom should be rated highly, but compassion and “customer service” should be seen as important values too. Profit, while an important value (as it represents merit), shouldn’t be the whole pie we look at but just a piece of the pie. Businesses if given the freedom to WILL screw some people over. Being libertarian doesn’t mean you have to like that- just think that the government solution is worse.

    It seems you guys will defend any business action though just because it’s not a government action.

  19. It seems you guys will defend any business action though just because it’s not a government action.

    No, it’s really that a lot of people really don’t think that petrol stations changing prices is as bad as the holocaust.

    It’s a minor inconvenenience at worst, and the difference in price between then lowest and highest day of the week is rarely more than 5-7%.

    It just seems to me you guys will attack any business action that doesn’t directly relate to saving whales or funding left-wing causes.

  20. Surely the start is that the refiners churn out the mix of products and it is expensive to store. After the weekend, Tuesday was the day inventories started to build up so they dropped the price. Customers work out the game so the refiners change the rules.
    It ain’t hard – unless the supermarkets, the price is up there.
    play the game….

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